Several BOJ Policymakers Called for Rate Hikes: Summary

Tokyo, Sept. 30 (Jiji Press)–Several policymakers of the Bank of Japan at its Sept. 18-19 policy-setting meeting urged the central bank to consider implementing its first interest rate hike since January, according to a summary of opinions at the latest meeting released by the bank Tuesday. A member of the BOJ’s Policy Board said that the central bank may be able to “return to its monetary policy stance to raise the policy interest rate, and adjust the level of real interest rates that are currently low compared with overseas economies” in light of declining economic uncertainties following a tariff deal struck between Japan and the United States, the summary showed. At the meeting, the BOJ decided to keep unchanged its policy of guiding the unsecured overnight call rate, Japan’s benchmark short-term interbank lending rate, to around 0.5 pct. Policy Board members Naoki Tamura and Hajime Takata opposed the status quo and proposed a hike in the policy rate to around 0.75 pct. According to the summary, a member of the board said that the BOJ’s 2 pct price stability target has been “more or less achieved,” citing inflationary pressure stemming from domestic factors such as sustained wage hikes. “Judging solely from the perspective of Japan’s economic conditions, it may be time to consider raising the policy interest rate again, given that it has been more than six months since the last rate hike,” a policymaker said. Meanwhile, a different member sounded cautious about an early rate hike, saying that the BOJ “should, at this point, maintain accommodative financial conditions with the current interest rate level and thereby firmly support the economy” as Japan’s consumer price index growth is expected to stand below 2 pct in fiscal 2026, which begins next April. The BOJ at the meeting also decided to sell to the market its holdings of exchange-traded funds, a process that would likely take more than 100 years to complete. With the BOJ expected to sell off the ETFs in a way that minimizes impacts on financial markets, “it is inevitable that the disposal will take considerable time,” a Policy Board member said. END [Copyright The Jiji Press, Ltd.]